The digital transformation of customer services Our point of view - Deloitte

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The digital transformation of customer services Our point of view - Deloitte
The digital transformation
of customer services
Our point of view
The digital transformation of customer services Our point of view - Deloitte
The digital age is disrupting
traditional customer service
models – new customer
touchpoints are appearing the
world over at breakneck speed
and against a backdrop of
rising expectations.

In this paper, we outline our
perspective on the implications
of digital technology for
customer service.
The digital transformation of customer services Our point of view - Deloitte
A customer service reformation is taking place. It’s radical,   For some of you, this call to action will not be new. Even
it’s far-reaching and it’s being driven by customers. The       so, identifying the depth and breadth of this reformation
digital age has transformed the way customers shop and          and deciding how to tackle it is a huge challenge. And
share their experiences. Today, customers are driving the       that’s why we’ve written this paper. We want to share our
buying process using websites, blogs, vlogs and social          view on the major implications of the digital movement
platforms. By the time they enter a store or become visible     and on the best way to respond.
in the sales funnel, they know what they want to buy and
how much they want to pay. It doesn’t stop there. Once          In writing this paper, we have drawn upon interviews and
the sale is closed, customers use those same channels to        discussions with service teams from several organizations.
join forces and name and shame those that dissapoint.           Specifically we’d like to acknowledge the contributions of
                                                                the following teams (in no particular order): Canon, UPC,
On the face of it, it seems a concerning development for        Liberty Global, Philips, LG Electronics, Heineken, Merck,
businesses. But there’s a bright side to these changes. New     Brambles and The Body Shop.
channels and technologies open up fresh opportunities
that can make a company stand out from the rest of the          I hope you enjoy this paper and don’t hesitate to get in
crowd. Opportunities to build an ongoing dialogue with          touch if you would like to continue the conversation.
customers. Opportunities to learn from customers and to         We would love to hear your views.
increase the relevance of your products and services. So
it’s time for every business to start seeking and fostering
enduring relationships with their customers – a relationship
that goes far beyond the initial sale.

Happy reading,

Theo Slaats
Partner
The digital transformation of customer services Our point of view - Deloitte
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The digital transformation of customer services Our point of view - Deloitte
Contents

Disruptive digital forces                          6

New capabilities for customer services             8

   1. Omni-channel customer interactions          11

   2. Servicing connected devices                 13

   3. Creating loyalty through customer service   15

   4. Nurturing customer communities              17

   5. Engaging user experiences                   19

Why are you waiting?                              20

Endnotes                                          21

Contact us                                        22
The digital transformation of customer services Our point of view - Deloitte
Disruptive digital forces

                                                                                        online channels is feeding this shift. According to a report
                                                                                        published by the Institute of Customer Service, consumers
In today’s digital world, the rules of customer engagement
                                                                                        today face significantly fewer problems when buying
are changing. To continue acquiring and retaining                                       goods and services than they did five years ago, but they
                                                                                        are more inclined to complain when things go wrong. The
customers, organizations need to recognize this and adapt
                                                                                        percentage of customers who experience a problem has
to these new dynamics.                                                                  decreased from 17% in January 2008 to 11.7% in July
                                                                                        2012, whilst the proportion of those that went on to make
                                                                                        a complaint rose from 72% to 76% in the same period[1].
                     The battleground for customers has never been so
                     competitive and complicated. Three disruptive forces are           3. Increasing competition
                     combining to create a new contest which will result in fresh       New competitors are flooding almost every market. Some
                     winners and losers:                                                are engaging in direct competition taking advantage
                                                                                        of the lower barriers of entry provided by globalization,
                     1. The rapid adoption of technology                                de-regulation and technology developments. Some, like
                     Businesses and their customers are adopting technology at          Facebook, Amazon, Google, Apple or countless smaller
                     a rapid pace. Social networks, mobile computing, analytics         ventures, are inventing new business models that create a
                     and cloud computing are all significant technology trends.         sudden impact on traditional markets. Take for example,
                     Even taken individually, they create major implications for        the once pioneer of photography, Kodak which was
                     customer services. Taken together, these digital trends are        forced into bankruptcy after failing to transform as digital
                     highly disruptive creating complex business opportunities          dissolved its high-margin film business.
                     and risks.
                                                                                        Together, these three market forces are exerting intense
                     2. Changes in customer behaviour                                   pressures on almost all industries. The consulting industry
                     Customer attitudes and demographics are changing.                  is no exception. Deloitte has recently made acquisitions
                     Customers are becoming more fickle and expect greater              and re-organized to ensure it has both depth and scale
                     business transparency and corporate responsibility.                to deliver the future digital needs of its clients through
                     Increased comfort with technology and high usage of                Deloitte Digital.

                     A whirlwind of disruptive forces are in play in today’s marketplace

                                       Rapid
                                   Technological
                                     Adoption                                                              Lower barriers of entry for online players,
                                                                                                           new business models, substitute products and
                                                                                                           increased customer bargaining power result in
                                                                                                           mounting competition

                         Low prices, intuitive usability, and
                         increased connectivity fosters rapid
                         technology adoption                           Marketplace
                                                                                                                         Increasing
                                                                                                                        Competition

                                                   Changing         Gen Y is technology savvy, has higher expectations
                                                   Customer         of business and larger disposable income. Overall this
                                                   Behavior         group has less time, are comfortable buying online
                                                                    and are less loyal to brands

6
The digital transformation of customer services Our point of view - Deloitte
The need for change                                                a much more powerful message than any company can
            Already in recent years, many businesses were beginning to         send. It’s no wonder that marketing teams are actively
            raise the bar on customer service in order to differentiate        investing time and money into engaging wider audiences
            from competitors and defend prices. Digitalization is acting       in order to seek out these positive stories.
            as an accelerator on this shift, turning customer service
            improvement into an urgent imperative. The mainstream              The digital disruption signals the need for a fresh customer
            adoption of social platforms and the use of online forums          service strategy. Service teams are being called upon
            is making business practices increasingly transparent.             to fulfil a greater purpose in the battle for customers.
            In the past, poor service may have led to a customer               Interacting on a frequent basis with customers, service
            complaining to a small number of family or friends. Today,         teams are in a prime position to engage with customers
            however, a post or a tweet can share bad experiences               and create success stories. Such stories can lead to better
            with hundreds of potential customers instantly and its             brand awareness, promote search engine listings, increased
            impact can be amplified to millions more at the click of           web traffic to webshops and ultimately improve sales
            a button. This digital amplification effect does not only          conversion rates and repeat business. Service has a bright
            punish a company for poor service. It works the other way          future ahead at the heart of customer communication.
            around too. Positive messages from delighted customers             The activity of first-class service teams will not only leave
            boost a company’s reputation for good service or excellent         customers with answered questions but drive customer
            products. This kind of ‘word of mouth’ marketing delivers          acquisition and loyalty.

The digital disruption signals the need for a
fresh customer service strategy. Service teams are
being called upon to fulfil a greater purpose in
the battle for customers

                                                                           The digital transformation of customer services Our point of view   7
The digital transformation of customer services Our point of view - Deloitte
New capabilities for
customer services

                                                                                    companies must review their operations with an open
                                                                                    mind accepting that a radically different approach may be
Service has a bright future at the heart of business
                                                                                    needed. All parts of the operating model (i.e. channels,
communications. By developing new capabilities, service                             people, process, technology and information) should be
                                                                                    reviewed. Appropriate design principles for the digital
teams can create differentiation and competitive advantage
                                                                                    world today should be defined and applied during the
                                                                                    operating model review. This will enable the envisioning of
                                                                                    improvement areas and new capabilities. (See later: New
                    During our research discussions we found that many              capabilities for customer service models).
                    organizations understand that the customer service
                    environment is changing. Indeed, several are already            From operational efficiency to drivers of
                    reacting to this trend and have deployed social media service   customer advocacy
                    channels. However, the general response to digitalization       An efficient operation is a necessity but is no longer
                    has been to deploy new technology-enabled interactions          sufficient for a successful service function. The key
                    channels simply bolted-on to existing operational models        objective is to drive consumer acquisition, retention and
                    and this, we believe, is missing the point.                     loyalty through service. In other words, service teams
                                                                                    should be generating repeat business and drive word of
                    New design principles                                           mouth marketing that contribute additional revenue to
                    The real importance of digital to business is not the           the organization. Teams should shift their focus towards
                    emergence of new technology; the importance is the shift        performance metrics such as customer profitability, Net
                    in customer behaviour. The market leaders of tomorrow           Promoter Score and customer lifetime value.
                    will not be decided by the amount of technology they
                    deploy, but how they evolve their whole service operation
                    to respond to the changing customer. We believe

                    The future is looking bright for consumer care

                                         Today                                       Tomorrow

                                        Operational efficiency                      Customer advocacy
                                        Service transaction                         Managed journeys
                         Strategic      Re-active response                          Pro-active advice
                                        Resolving issues                            Nuturing communities
                                        Information silos

                                                                                    Information consistency
                                        Emails and Phone calls
                                                                                    Social Interactions
                                        Informative Websites
                      Operational                                                   Engaging Applications
                                        Information systems
                                                                                    Connected Experiences
                                        Desktop-based
                                                                                    Touch-based, Voice-based

8
From service transaction to managed customer                     From resolving issues to building communities
            journey                                                          The ambition of service teams should not stop at answering
            Rather than optimizing service transactions in isolation,        questions and resolving issues. Our objective should focus
            clients are asking us to help bring sales, marketing and         on building thriving customer communities both in the
            service interactions closer together. They want customer         online and real world. Communities have been and still are
            service to take a central role in customer engagement while      the territory of marketers, however, service should now play
            integrating processes across all front-line teams to deliver a   a role in supporting and nurturing these groups.
            consistent and effective customer journey.
                                                                             New capabilities for customer service delivery
            From re-active to pro-active                                     models
            Organizations must begin pro-actively reaching out to            By applying the design principles mentioned earlier in this
            customers with information, advice and where appropriate,        paper to a review of the service operation, a number of
            forewarnings. Acting as a partner to your customer and           new capabilities can be envisioned. We have combined the
            advising them how to make the most out of your services          output of our client discussions with our thinking on design
            and reduce costs for themselves are high value services that     principles to identify five important capabilities for today’s
            will single out your organization from the pack.                 service delivery models. These capabilities are highlighted
                                                                             against an example customer service delivery model in the
                                                                             illustration below.

The real importance of digital to
business is not in the emergence of
new technology; the importance is
the shift in customer behaviour.

                                                                         The digital transformation of customer services Our point of view   9
New capabilities for the service delivery model

                                                       Customers and Partners

                                                                                                             1
                                                       5                                                                    New capabilities
         Channels/        Websites       Social           Mobile E-mail Connected                                Face 2
                                                                                            Phone       Letter
     (Touchpoints)     (own & external) Networks         Web/App           Device                                 Face
                                                                        2                                                     1    Omni-channel customer
                                                              5                                                                    interactions
        Tier 0:                  Identification,
                                                                                 Self-service portal                               Servicing connected
        Self service       verification and routing                                                                           2
                                                                                                                                   devices

        Tier 1:        3      4                                                                                               3    Creating loyalty through
        Initial                                       Contact Centre 1st Line Support                                              customer service
        contact                                                                                                                    Nurturing customer
                                                                                                                              4    communities
                       3
        Tier 2:
                            Escalated               Escalated               Contract,                    Invoicing                 Engaging user
        Escalated       Technical Support       Customer Services         warranty admin                and Billing           5    experiences
        contact

        Tier 3:        3                                                                            4
                            Physical           Field             Finance,           Customer             Sales and
        Offline
                            Branch           Engineers         Supply Chain         Analytics            Marketing
        tier

      (Please note that the service delivery model is for illustrative purposes only. The model must be tailored towards the business and industry.
     The service capabilities must also be designed within the context of a specific industry and business model. The capabilities described above
     do not apply to all industries and business models.)

     1. Omni-channel customer interactions – The explosion
     of digital services mean that organizations need to                              What is a customer service delivery model?
     understand the entire customer journey and not just                              The service delivery model concept puts service
     optimize contact points individually. Building unified and                       operations into tiers. The first tier receives the initial
     pro-active cross-channel services will deliver differentiated                    incoming contact and tries to identify, diagnose and
     customer experiences that drive loyalty and repeat sales.                        resolve the query. If this cannot be done, the query
                                                                                      is routed to the appropriate second-tier operation,
     2. Servicing connected devices - Connected devices                               which is made up of specialists. If the second tier
     enable service teams to monitor equipment remotely and                           cannot resolve the query, it can be passed up to the
     analyse device data to predict possible failures. Advanced                       third tier, which is even more specialized, and so on.
     analytical techniques offer valuable opportunities to deliver                    Increasingly important in the future service delivery
     better services and improve efficiency.                                          model is the Tier 0, which provides automated or
                                                                                      self-service functionality.
     3. Creating loyalty through customer service - The
     mainstream adoption of technology has created greater
     transparency of business practices. Customer experiences,                     5. Engaging user experiences – Today, online channels
     good or bad, may now be amplified to reach millions of                        are a critical aspect of the customer journey. The quality
     potential customers within minutes. The stakes are high to                    of user interfaces in this channel significantly influences
     create lasting relationships and the initial contact tier of the              customer perceptions. Investing in user experience
     service model should take a leading role.                                     throughout the implementation of digital initiatives can
                                                                                   improve customer satisfaction and brand recognition.
     4. Nurturing customer communities – Organizations can
     better leverage their customers as a resource. A customer                     In the remainder of this paper, we set out our views and
     community can act as a self-help network, generate                            recommendations in developing these new capabilities.
     valuable user content and provide a wealth of product
     development ideas. Service teams should play their role in
     stimulating and growing customer communities.

10
1. Omni-channel customer
interactions

                                                                                        Understanding channel preferences
Customers are increasingly using multiple touchpoints to                                Different customers will have different communication
                                                                                        preferences. Omni-channel must enable these different
resolve service issues, expecting an integrated and                                     touchpoints to work together in multiple ways in order to
seamless experience.                                                                    support the customers preferred journey. As the number
                                                                                        of channels increase, expect your customers to fragment
                                                                                        over them across different age groups. Expect also that
                    Digital innovations are a major influence on the way
                                                                                        channel preferences will change depending on the context
                    customers interact with brands and request services.
                                                                                        of process, location and time. Leverage the customer
                    More than 60% of customers interact through multiple
                                                                                        segmentation work from your marketing department to
                    channels and irrespective of time, place, device or medium,
                                                                                        better direct your engagement and support efforts across
                    they expect consistency. As a result, organizations must
                                                                                        appropriate channels for your target audience.
                    constantly evolve their support models to accommodate
                    this ever-changing landscape.
                                                                                        Getting on the front foot
                                                                                        Customer service has traditionally been dependent on
                    Don’t compete, complement
                                                                                        ‘what now’ rather than ‘what next’. The digital age calls
                    In the past, companies have developed channel or
                                                                                        for this to change. These days, customers are accustomed
                    product-specific support models which compete for
                                                                                        to advance notification of product launches or other
                    supremacy. However, in the eyes of the customer, it’s a
                                                                                        marketing promotions via their mobile devices and social
                    single organization and the result is a diminished customer
                                                                                        media. Why should customer service be any different?
                    experience. Instead an omni-channel customer service
                                                                                        Identifying relevant issues and informing customers
                    approach is required that blends both digital channels
                                                                                        through preferred touchpoints manages customer
                    (mobile, social, kiosks) and traditional channels (call centre,
                                                                                        expectations and increases trust when things do go wrong.
                    branch/stores). In this approach the different support
                                                                                        Investing in up-front service notifications will reduce the
                    touchpoints are designed to complement each other,
                                                                                        number of inbound calls and differentiate you from the
                    allowing users to switch between channels without the
                                                                                        competition.
                    need to repeat information. Furthermore, multiple channels
                    can be used simultaneously (for example, browsing a
                    physical store while ordering the goods for home delivery
                    from a mobile device).

                    Transforming the business model: Omnichannel

                            Single-channel                                Multi-channel                          Omni-channel
                            Face-to-face, snail mail and phone            Multiple-channels enabled              Channels can be used
                            contact points                                (including web and email) for          in combination and
                                                                          use one at a time                      simultaneously

                                                                                  The digital transformation of customer services Our point of view   11
The bottom line

New channels should be introduced     In today’s, digital world, organizations must understand
                                      the entire customer journey and creatively apply the right

at the right level of maturity. Old   technology at the right time to build greater customer
                                      engagement. The omni-channel approach to customer

channels should be phased-out to      service provides convenience and accessibility for customers
                                      to interact over the channels that they want to use. In

keep the operation “lean and mean”    reaching this goal, each improvement must not compete
                                      with the existing channels. New channels should be
                                      introduced at the right level of maturity while early enough
                                      to differentiate and deliver the edge over competition. Old
                                      channels should be phased-out to keep the operation “lean
                                      and mean”. Consistent pro-active cross-channel services
                                      will put organizations ahead in building and maintaining
                                      relationships with their customers.

12
2. Servicing connected devices

                                                                                       Developing reliability models
                                                                                       Powerful analytical techniques can now be exploited
Remote monitoring of connected devices offers a new
                                                                                       to improve asset maintenance services to internal and
growth area for services as well as more efficient and effective                       external customers. A reliability model can be developed to
                                                                                       determine the probability of failure of a given asset. Such
maintenance approaches.
                                                                                       a model predicts failure based on statistical analysis of
                                                                                       performance data making the quality of the model highly
                      An ever increasing number of sensory capabilities are            dependent on the quality of the source data. Consequently,
                      becoming available to monitor device performance                 data preparation is a critical task. All potential internal
                      remotely. This, coupled with the decreasing hardware and         and external sources of information should be identified,
                      network costs to connect devices to the internet, are now        audited for quality, cleansed and prepared for analysis.
                      offering opportunities for business growth and greater           Both the preparation of data as well as it’s analysis are
                      efficiency in service.                                           challenging tasks demanding skills and experience with
                                                                                       data manipulation and empirical studies, creativity and
                      Driving new services growth from connected                       knowledge of specialist data mining tools and techniques.
                      devices
                      A number of organizations are looking towards connected          Predictive maintenance approach
                      devices to support growth strategies through service             Connected devices provide the ability to monitor asset
                      revenues. Organizations such as Canon and British Gas for        conditions such as usage, temperature and vibration in real-
                      example, plan to offer their customers higher value-add          time. This monitoring capability, combined with reliability
                      services shifting further away from simple products. In the      models enables the predictive maintenance approach.
                      Canon case, by monitoring paper and ink usage, Canon             Maintenance is performed based on the condition of the
                      can provide customers with greater transparency over their       asset compared to the reliability model. Monitoring should
                      printing assets and advise on how to optimise the machine        be applied on the root causes of failure (true condition)
                      fleet. This would be well-received by customers since            rather than on the symptoms when failure has already
                      Gartner estimates that “firms that actively manage their         begun. This means maintenance is only performed when
                      printer fleets can save up to 30% in printing costs”. British    required, therefore avoiding over-maintenance. This
                      Gas is aiming at the equivalent goal of helping households       approach accurately schedules cost-effective maintenance
                      optimize energy consumption. Their vision takes the              and leads to increased availability of the asset, extended
                      concept a step further to also enable consumers to control       asset lifetimes and improved engineer efficiency.
                      heating while away from their home via mobile devices.           Information from the reliability model means that the scope
                                                                                       of the maintenance is also forecasted, as root causes are
                      Traditional maintenance approaches                               known and the monitoring of present condition of assets
                      Traditionally, maintenance has followed a corrective             enables more effective ordering of spare parts.
                      or preventative approach. In the corrective approach,
                      maintenance is performed when failure happens. This leads
                      to unplanned activities and a high stock of spare parts.
                      In the preventative approach, maintenance is performed
                      periodically to decrease unexpected failures. However,
                      over-maintenance and cost of spare parts leads to
                      additional costs. Today’s technology advances in both data
                      analytics and connected devices present the opportunity to
                      improve upon traditional methods and apply a predictive
                      maintenance approach.

                                                                                  The digital transformation of customer services Our point of view   13
The bottom line

To improve service maintenance                                                       The development of technology enabling service teams
                                                                                     to connect and monitor devices remotely will continue to

approaches through advanced                                                          accelerate. Service organizations need to start to grapple
                                                                                     with the opportunity presented from data analytics and

analytical and remote monitoring                                                     remote monitoring to improve maintenance processes. This
                                                                                     journey will require new data analytic skillsets within the

technology, organizations must                                                       service organization that are likely not to exist in sufficient
                                                                                     measure today. New service processes must be designed

acquire a new set of skills.                                                         and implemented. Firstly, for a subset of high value
                                                                                     products and then increasingly across the mainstream.
                                                                                     Organizations, that start the journey now will gain the
                                                                                     most from the ever-increasing possibilities, while those that
                                                                                     do not will run increasingly inefficient operations compared
                                                                                     to their peers.

            We use the following process to model the probability of failure prediction

                Company Data                                                                                           Third party data

                Dynamic data:                                            Determine
                                                                                                                Dynamic data:
                e.g. asset usage, vibrations,                         present condition
                                                                                                                e.g. ground water level, soil
                level of stress, temperature                             of the asset
                                                                                                                pressure (pavement), present
                                                                                                                and historical weather

               Static asset data:                                                                                 Static asset data:
               e.g. age, type, material,                                                                          e.g. Installation environment,
               root cause data                                            Determine
                                                                                                                  material fatigue limits
                                                                        probability of
               Dynamic data:                                         failure of the asset                         Dynamic data:
               e.g. historic failure data                                                                         e.g. historic failure data

                                                                      Reliability Model

            Determining the probability of failure draws upon dynamic and static data sources both from within the company and from third parties.

14
3. Creating loyalty through
customer service

                                                                                     Redefining the role of face-to-face channels
                                                                                     Many predicted that the shift from “bricks to clicks” would
Today’s connected world demands that service teams
                                                                                     spell the end of retail stores. However, the recent success
take a greater role in driving customer engagement and                               of Apple “showroom” stores has clearly demonstrated
                                                                                     that the role of the physical channel is not redundant,
loyalty. This shift calls for organizational and cultural
                                                                                     it has merely transformed. While self-service channels
transformation.                                                                      offer customers convenience and efficiency, face-to-face
                     The competition to acquire new customers is intense.            channels offer depth and experiences. Organizations must
                     Customers have more choice and greater access to                review if they are getting the most value from physical
                     information than ever before. They are using social media,      centers and face-to-face interactions. Combining service,
                     forums and blogs to connect and share their experiences         sales and marketing through this channel can deliver
                     of good and business to aid one another in purchasing           excellent brand impressions. For organizations associated
                     decisions. Considering the cost of winning new customers,       to the retail sector, the technology changes to come will
                     developing long-term loyalty with customers once you have       be extremely important. Mobile applications and digital
                     them is more critical than ever. Service teams must exploit     payment technologies are set to mature over the next
                     their frequent contact points with customers to play a          few years. Customers can already be identified as they
                     crucial role in building loyalty.                               enter and leave stores opening the prospect of individually
                                                                                     tailored loyalty offers, automated registration of purchased
                     Customer service teams will need to review their people         products and digital payments without the need to
                     and processes to ensure they are prepared for this              checkout at a physical cash register.
                     new role. Service staff must be relationship builders,
                     consultative, listeners and good communicators. Hire for        Performance measurement over the full customer
                     character and attitude, train for skills may be a known         journey
                     principle to follow but judging by a recent report from         If we expect customer services to drive loyalty and
                     the Institute of Customer Service there is much room            manage end-to-end customer experiences, then the way
                     for improvement. The report of 3000 consumers found             we measure and reward their activities must change.
                     that 62% of complaints were about staff attitudes and           Performance measurement of service in general has
                     competences, compared to just 34% about the quality or          focused on efficiency metrics (such as average handling
                     reliability of goods and services [1].                          time and call volumes per agent). To drive relationship
                                                                                     building in service, KPIs must be appropriate. Net Promoter
                     Dealing with the expanding scope of service                     Score (NPS) and Customer Lifetime Value (CLV) are two
                     Companies that are utilizing digital support channels such as   KPIs that becoming increasingly popular for measuring the
                     Facebook, Twitter or web chat are noticing that queries on      effectiveness of service teams. Zappos.com, is one of the
                     these channels have a different mix from traditional service.   best examples of taking a relationship building approach
                     Customers not only request help for product issues but          to the contact center. They judge performance of an agent
                     also seek buying advice and comparisons with competing          on building customer relationships by assessing if the agent
                     products. The customer does not want to worry about             made a personal emotional connection with the customer
                     whether a query should go to sales, service or marketing,       and addressed unstated needs. This unorthodox approach
                     they just want answers. As a result, the service team needs     has delivered impressive results with gaining repeat orders
                     to be trained and equipped with helpful responses that also     and they rapidly grew to a $1bn business just 10 years after
                     ushers the customer along the buying path.                      being founded. Of course, minimizing costs will always
                                                                                     be important factor and cannot be dismissed. Balanced
                                                                                     scorecards will be required to ensure the right focus on
                                                                                     both efficiency and quality of customer experience.

                                                                                The digital transformation of customer services Our point of view   15
The bottom line
            Digitalization is increasing the importance of customer       Apple
            services in acquiring and retaining customers. In response    Apple has re-invented the retail store bringing
            to digitalization many service teams are launching            together marketing, sales and service activities to
            technology initiatives to enable their service teams engage   deliver a complete, immersive brand experience. In
            with customers on web, mobile and social channels.            a recent presentation to the Goldman Sachs investor
            However, opening new interactions channels is addressing      forum, Tim Cook, CEO at Apple, sung praise for the
            only a minor aspect of the change required. The more          Apple store. He revealed that he didn't think Apple
            significant shift is in consumer attitudes and expectations   "would have been nearly as successful with iPad"
            of service. This cannot be resolved simply through hooking    without this differentiated physical channel. "There's
            up channels on to Facebook and Twitter. This must be          no better place to discover, explore, and learn about
            answered by revising the traditional service agenda of        our products than in retail," Cook said. He went on
            efficiency and cost reduction to refocus on transforming      to describe the store staff deployed as "the most
            the service team into a loyalty generator. This must be       amazing, awesome, incredible people on earth. "It's
            backed up with the right capability in people and culture,    the best retail experience, it's an experience where
            and the right metrics to drive relationship-building          you walk in and instantly realize it's for the purpose
            behavior.                                                     of serving, not selling," he said, adding that the
                                                                          stores have also taken on the function of a gathering
                                                                          place "that has an important role in the community."
                                                                          The stores have been so successful that Apple plan
                                                                          to continue investing here, enlarging 20 stores and

The role of customer services has                                         adding 30 more[2].

extended right across the customer
journey.
Current customer service models
must be reassessed to ensure they
also support customer acquisition
and loyalty.

16
4. Nurturing customer
communities

                                                                                     Consistency across forums, blogs and social
                                                                                     networks
Nurture a strong customer community to reduce call
                                                                                     An online community does not exist only on one forum
volumes, generate greater customer insight, co-develop                               or social platform. Customers will traverse these different
                                                                                     sources of information as they discover products and
innovative improvement ideas and create compelling word of
                                                                                     services. Therefore, consistency in business communication
mouth marketing.                                                                     is critical. It is important that service teams and marketers
                    Many service organizations are failing to get the most of        join forces to co-ordinate engagement activities and to
                    one of their most important resources – their customers.         make the most of contributions. Forming a cross-functional
                    This group knows why your product sells, where it falls          team comprising key stakeholders within the company will
                    short and the best solutions to common issues. The social        also enable a rapid co-ordinated response in the case of an
                    tools and online platforms available today can enable            emerging crisis or “attack” against your brand.
                    communities to be developed quickly and efficiently.
                    Service teams can play an important role in enabling these       Branded forums first
                    communities to increase levels of engagement and tap into        Customer forums are now commonplace in many
                    this valuable knowledge.                                         industries. Existing and potential customers mix in these
                                                                                     channels to discover information or discuss relevant topics
                    Connecting the outside to the inside                             and issues without contacting the business directly. This
                    Building customer communities is not about Millenials            customer-to-customer self-service process brings obvious
                    socializing on Facebook and Twitter. It’s about creating         operational benefits. Where possible, try to lead these
                    connections between the people within your organization          conversations to take place on your own company forums.
                    to the people that buy your products and services. Human-        If (potential) customers use other social sites, consequences
                    to-human interactions, even via online channels, can             follow: the company loses control of user-generated
                    build authentic relationships between organization and           content, and are often asked to pay for access to customer
                    customers. Service teams should be empowered to respond          data or the opportunity to respond to customers queries.
                    to customer service issues raised by the community using
                    both your brand identity and their own personality. Trust        From customer community to co-creation
                    and credibility is created not only with the individual          A number of organizations have already taken the
                    customer but also with the potential millions watching.          customer community concept beyond an active online
                    Some organizations are concerned with the loss of                forum. There are many examples of customers and
                    control but training staff to interact responsibly is the key.   businesses working together to create new products
                    Be selective in the people you recruit to communicate            and services. The main recipe for success comes through
                    through social media channels and invest in training and         a good rewards system that promotes contribution.
                    education. Combine that with a simple, clear framework           Incorporating some sort of monetary reward is an obvious
                    that individuals can personalise, in addition to robust          motivator. giffgaff is a company that has implemented this
                    security and privacy processes, and you mitigate the risk of     type of extrinsic rewards system successfully. In addition to
                    inappropriate broadcasts while putting your business on          extrinsic rewards, organizations should also find intrinsic
                    the front foot.                                                  motivation drivers for example publicly recognising
                                                                                     customers for their contributions and promoting their
                                                                                     status within the community. Successful community
                                                                                     sites have adopted what is sometimes referred to as
                                                                                     gamification techniques. Gamification implements intrinsic
                                                                                     motivation systems based upon achieving progress,
                                                                                     recognition and/or competition. Tripadvisor for example,
                                                                                     have applied gamification techniques to their community
                                                                                     that post travel reviews and share travel tips. Tripadvisor
                                                                                     makes transparent the number of reviews each contributor
                                                                                     has given distinguishing between levels of reviewer and
                                                                                     allowing contributions to be scored as helpful to encourage
                                                                                     more detailed reviews. This gives the top reviewer a feeling
                                                                                     of recognition while adding a useful internal credibility
                                                                                     system to the customer community system.

                                                                                The digital transformation of customer services Our point of view   17
The bottom line
                                     Building a customer community enables organizations
                                     to drive greater engagement and contribution from their
                                     customers. With the right leadership, this approach will
                                     lead to reduced support calls, word of mouth marketing
                                     and greater customer driven product design. Like any
                                     new business initiative, engaging in online customer
                                     communities comes with risks but through appropriate
                                     governance, business policies and training this should not
                                     be feared. Service teams must work closely with other
                                     teams to keep communications consistent and leverage the
                                     best skills to participate. Intrinsic and extrinsic motivators
                                     should be implemented to push the community to a level
                                     of engagement where customers are actively helping
                                     others with service issues and creating new ideas and uses
                                     for products or services.

                                       giffgaff
                                       giffgaff demonstrates excellent use of customer
                                       community. This UK mobile operator has such high
                                       levels of customer contribution that they only require
                                       33 employed staff to run their operation. giffgaff
                                       have no call centre. Instead queries can be posted
                                       on to their website or via Facebook or Twitter pages

Intrinsic and extrinsic motivators     where other customers help resolve issues. giffgaff
                                       customers solve 50% of questions and most questions

should be implemented to push          are answered in three minutes or less[4]. It doesn’t
                                       stop there, hundreds of business ideas have been

the community to a level of            generated and implemented. The community even
                                       developed Nokia[5] and iPhone[6] mobile applications.

engagement where customers             giffgaff have achieved this symbiotic relationship by
                                       rewarding their customers with points whenever they

are actively helping others with       help the company. These points can be traded for
                                       airtime credit, cash or donated to charity.

service issues.

18
5. Engaging user experiences

                                                                                           Ensure consistency across all touchpoints
                                                                                           Consistency is the key to successful UX. That’s why
Online channels play a critical role in the perception of your
                                                                                           companies are investing in specific UX tools and processes,
brand. High quality interfaces convey credibility, reliability                             including guidelines, content libraries and digital asset
                                                                                           management systems. This allows UX teams to deliver a
and trust, the pre-requisites for a successful business
                                                                                           consistent experience across different products and digital
relationship                                                                               touchpoints. Nevertheless, being consistent does not
                                                                                           equate to being identical. It’s crucial to consider not only
                                                                                           the different interfaces (e.g. clicks becoming touches and
                      The user experience (UX) defines a customer’s perception             scrolling becoming swiping) but also the user’s motivations
                      of human-computer interaction through a specific channel             and goals, as these are likely to differ between devices.
                      or device. It includes the customer’s experience of using a          Understanding these subtle variations is essential.
                      device, based not only on its ‘look and feel’ but also on its
                      practical aspects such as usability and efficiency. Nowadays,        Bring the experience to life!
                      cutting-edge technology devised by UX leaders Apple                  Bring the user experience to life at early stages in your
                      and Google has led consumers to expect a digital service             project, from design through to prototyping. In other
                      experience that is clean, simple and user-friendly, regardless       words, give all stakeholders – including your customers
                      of device, platform or service provider.                             –the chance to see, touch and use the new touchpoint so
                                                                                           they can provide feedback. This should be done several
                      No second chances to make a first impression                         times before the channel or device is ready to go to
                      In today’s world, customers are discovering and engaging             market. This will not only ensure good customer experience
                      with a high proportion of services and products online.              from day one but also instil the confidence to undertake
                      As a result, online channels are playing a critical role in          another initiative. In the technology world, this is known
                      setting perceptions for the overall brand. In response,              as ‘agile development’ and it’s becoming the standard for
                      service organizations embracing the digital age have                 digital development.
                      been investing heavily in UX. They believe that putting UX
                      capability high on the agenda for business and technical             Customer driven design
                      teams helps generate ideas and translate them into a                 Digital technology requires a fresh approach to design.
                      business reality. Crucially, they are ensuring creative input        There are few hard and fast rules for what will and won’t
                      throughout the lifecycle of the project, especially when             work. Much depends on the context in which your
                      it comes to post-implementation, when it’s essential to              customer will be using the service. Service organizations
                      respond quickly to feedback and customer behaviour with              winning the race have a deep commitment to early trialling
                      release updates and tweaks.                                          and testing – after all, you don’t find the winning format
                                                                                           by accident. They invest in A/B testing and try out multiple
                                                                                           variations of a concept to understand which one works
                                                                                           best and then they go with what is proven to work.

Digital technology requires a fresh                                                        The bottom line
                                                                                           UX is a battleground for service organizations trying to
approach to design. There are few                                                          gain competitive advantage within industries increasingly
                                                                                           committed to digital customer services. Investing in user
hard and fast rules for what will                                                          experience capability is essential if they want to win the
                                                                                           fight. They need to focus not only on fostering innovations
and won’t work.                                                                            that promote the best possible experience but also on
                                                                                           testing those innovations frequently and at an early stage.
                                                                                           Pushing for consistent UX will ensure the customer service
                                                                                           reflects the brand and delivers the right experience across
                                                                                           all touchpoints.

                                                                                      The digital transformation of customer services Our point of view   19
Why are you waiting?

                                                                                    Developing a sustainable approach
                                                                                    To meet future challenges in a sustainable way, customer
Today’s customer service leaders must respond to rising
                                                                                    service leaders must develop the capability to quickly
customer expectations and acclimatize to the breakneck                              identify, evaluate and invest in the right trends at the
                                                                                    right time. For many organizations, this means acquiring
speed of technology. The pace of change is accelerating.
                                                                                    or developing new talent that better understands digital
Those that do not start their journey now will be left                              technologies and how to apply them. Interestingly, many
                                                                                    marketing and eCommerce teams have already begun to
behind.
                                                                                    seek out this kind of talent to meet their digital challenges.
                                                                                    Social media managers, data scientists and growth hackers
                     This paper has focused on only five selected customer
                                                                                    are some of the new job titles that are lining these teams.
                     service capabilities from countless possibilities. The
                                                                                    Service, sales and marketing teams should work together
                     capabilities chosen are relatively mature and relevant
                                                                                    closely to leverage this talent across the entire customer
                     now. This has been a conscious decision in an attempt to
                                                                                    journey.
                     provide practical advice. In our view, developing service
                     capabilities based upon a vision of the world in 2020 for
                                                                                    A different approach is also required for making investment
                     example, is pointless – things are changing too quickly and
                                                                                    decisions and implementing new capabilities. The speed
                     cannot be predicted. Already on the “horizon of adoption”
                                                                                    and pace of innovation means that looking further than 18
                     are developments such as 3D printing, speech-driven
                                                                                    months ahead is already difficult and trying to construct
                     interfaces, driverless cars and object sensory systems.
                                                                                    detailed benefit cases up-front can kill innovation. Instead,
                     We will need to understand the implications of these
                                                                                    adopt an entrepreneurial spirit of experimentation and
                     developments far before 2020.
                                                                                    establish small innovation funds to trial new approaches.
                                                                                    Initiatives should be run using an “agile” approach. This
                     Change will continue, and continue to accelerate
                                                                                    focuses on quickly bringing an idea to market and then
                     Technology advances continue to accelerate at an
                                                                                    iteratively improving it through customer feedback. Take a
                     exponential rate. Ten years ago, a $1000 computer had
                                                                                    balanced view of successes and failures and accept that not
                     the equivalent computing power of an insect brain. Today,
                                                                                    everything you try will be a success.
                     the same priced computer has the computing power of
                     a mouse. In ten years, it will be the equivalent of one
                                                                                    What are you waiting for?
                     human brain[7]. The advances that lie ahead are yet more
                                                                                    The digital disruption has left many organizations spinning
                     staggering. Service teams should not make the fatal
                                                                                    but revealed fantastic opportunities for higher levels of
                     mistake of waiting for stability. Leaders must embrace
                                                                                    customer engagement. The time is now for customer
                     continuous development and actively look forwards for
                                                                                    service teams to take advantage of this and step up on to
                     new opportunities. Innovative organizations can move
                                                                                    centre stage. Deliver first-rate experiences and watch the
                     quickly ahead, adapting to avoid challenges, capitalising on
                                                                                    customers come back time and time again. What are we
                     growth areas and eroding the market share of traditional
                                                                                    waiting for?
                     competition.

20
Endnotes

      1. Handle with care: an analysis and toolkit to improve complaint handling, January 2013. This report from the Institute of
         Customer Service is based upon a survey of 26,000 consumers.
      2. Presentation by Tim Cook at the Goldman Sachs Technology and Internet Conference, February 2013.
         See http://www.macworld.com/article/2027900/this-is-tim-cook-at-the-2013-goldman-sachs-conference.html?page=0
      3. How Walmart and Heineken will use Shopperception to put your In-Store experience in
         Contetxt. See Forbes news article at http://www.forbes.com/sites/shelisrael/2013/01/27/
         how-walmart-and-heineken-will-use-shoppercetion-to-put-your-in-store-experience-in-context
      4. According to giffgaff. See http://community.giffgaff.com/t5/Blog/
         Forrester-Groundswell-Award-Entry-giffgaff-The-mobile-network/ba-p/1236217
      5. According to giffgaff. See http://community.giffgaff.com/t5/Blog/First-giffgaff-app-in-the-Nokia-Ovi-Store/ba-p/44405
      6. According to giffgaff. See http://community.giffgaff.com/t5/Blog/Our-first-giffgaff-iPhone-apps/ba-p/38603
      7. As predicted by Salim Ismail (founding Executive Director of Singularity University) during his introduction speech.
         Singularity University Netherlands @Deloitte, February 2013. See http://www.youtube.com/watch?v=ol6pk72ICzg
         This growth in affordable computing power is related to Moore’s Law, an observation made by Intel co-founder
         Gordon Moore.

                                                                 The digital transformation of customer services Our point of view   21
Contact us

       Researched and written by          Industry Contacts
       Victor Hoong                       Maureen Hughes
       Director                           Partner, Technology, Media and Telecommunications
       vhoong@deloitte.nl                 maureenhughes@deloitte.nl
       +31 6 1312 7261                    +31 8 8288 2549

       Contributors                       Erik Nanninga
       Ben Morgan                         Partner, Consumer Business
       Niels Nuyens                       enanninga@deloitte.nl
       Thomas Veltman                     +31 8 8288 0276
       Mireille Paalvast
       James Yong-a-Poii                  Stephen Ward
                                          Partner, Consumer Industry
       Customer Transformation Contacts   stephenward@deloitte.nl
       Theo Slaats                        +31 8 8288 2852
       Partner
       tslaats@deloitte.nl                Stef Oud
       +31 8 8288 2531                    Partner, Manufacturing
                                          soud@deloitte.nl
       Patrick Steemers                   +31 8 8288 1806
       Partner
       psteemers@deloitte.nl              Jean-Pierre Boelen
       +31 8 8288 5892                    Partner, Financial Services
                                          jboelen@deloitte.nl
       Emeric van Waes                    +31 8 8288 7300
       Partner
       evanwaes@deloitte.nl               Marcus van den Hoek
       +31 8 8288 4619                    Partner, Energy and Resources
                                          mvandenhoek@deloitte.nl
                                          +31 8 8288 0860

22
The digital transformation of customer services Our point of view   23
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